Homework answers / question archive / On January 1, 20X1, Popular Creek Corporation organized SunTime Company as a subsidiary in Switzerland with an initial investment cost of Swiss francs (SFr) 80,000

On January 1, 20X1, Popular Creek Corporation organized SunTime Company as a subsidiary in Switzerland with an initial investment cost of Swiss francs (SFr) 80,000

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On January 1, 20X1, Popular Creek Corporation organized SunTime Company as a subsidiary in Switzerland with an initial investment cost of Swiss francs (SFr) 80,000. SunTime's December 31, 20X1, trial balance in SFr is as follows:

 

Debit Credit

Cash SFr 7,200

Accounts Receivable (net) 23,500

Receivable from Popular Creek 6,000

Inventory 28,000

Plant & Equipment 106,000

Accumulated Depreciation SFr 11,300

Accounts Payable 13,800

Bonds Payable 54,500

Common Stock 80,000

Sales 144,600

Cost of Goods Sold 70,500

Depreciation Expense 11,300

Operating Expense 34,500

Dividends Paid 17,200

Total SFr 304,200 SFr 304,200

 

 

 

Additional Information

1. The receivable from Popular Creek is denominated in Swiss francs. Popular Creek's books show a $5,000 payable to SunTime.
2. Purchases of inventory goods are made evenly during the year. Items in the ending inventory were purchased November 1.
3. Equipment is depreciated by the straight-line method with a 10-year life and no residual value. A full year's depreciation is taken in the year of acquisition. The equipment was acquired on March 1.
4. The dividends were declared and paid on November 1.
5. Exchange rates were as follows:

  

SFr $

January 1 1= 0.73

March 1 1=0.74

November 1 1=0.77

December 31 1=0.80

20X1 average 1= 0.75

 

6. The Swiss franc is the functional currency.

 

Required:

a. A proof of the translation adjustment.